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Alabama Personal Income Tax Laws

Nearly all states levy a tax on personal income and require taxpayers to file their returns in mid-April (corresponding with the deadline for federal returns). A number of states use a "progressive tax" requiring higher earners to pay a larger percentage of their income to the state, as does the federal government, while others apply the same rate for all taxpayers. States lacking an income tax generally make up for it through other types of consumer taxes, such as retail sales tax. Revenue generated from personal income taxes helps pay for public services such as police and emergency personnel, as well as roads and schools.

Alabama Personal Income Taxes at a Glance

Alabama's income tax code follows the progressive model, in that the lowest earners pay the lowest rate (2 percent), while the top income bracket (paying a 5 percent rate). For married taxpayers filing jointly, the income levels are doubled.

Depending on a number of factors, such as filing status, some Alabama taxpayers may claim a standard deduction of up to $7,500. But the standard deduction for most taxpayers in the state is $2,000 ($4,000 for joint filers).

See additional details of Alabama's personal income tax laws in the following chart:

Code Section 40-18-1, et seq.
Who is Required to File Resident natural persons, fiduciaries, estates and trusts, and nonresidents receiving income from property owned or business transacted in the state
Rate First $500: 2%; $501-$3,000: 4%; Over $3,000: 5% (for a single person); double the amounts for married persons filing jointly.
Federal Income Tax Deductible Yes
Federal Income Used as Basis Yes

Note: State laws are constantly changing, particularly those affecting tax rates and exemptions. Make sure you contact an Alabama tax law attorney or conduct your own legal research to verify the state law(s) you are researching.

How to File Income Taxes in Alabama

Alabama taxpayers may file their returns electronically or by traditional mail. In order to file electronically, you must sign up with MyAlabamaTaxes or use one of the approved private sector tax services (such as H&R Block or Liberty Tax Online). You may download Alabama state tax forms for the past 10 years at the Alabama Department of Revenue website.

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